Knowledge Bank Blog, Channel Execution

The 3 Ways To Think About Channels

Do you have the right channel approach?

What is your favourite piece of management speak?

Perhaps it is “agile”?  As in “we need to have an agile approach to this”.  Though what it really means is… “we need to be able to quickly change our minds when we realise we’ve got it wrong”.

It might be “low hanging fruit”?  As in “we need to go after the low hanging fruit first”.  Though what it really means is… “the things we really need to do are hard, let’s do the easy stuff first”.

Or maybe it is “lean in” or “synergy” or “ideate”?  We could go on (and on…)

People use this management speak to give the impression of expertise.  And it often works.  Why?

Firstly, because the other people in the room who think it’s bullsh*t don’t want to call it out.  They think it’s bullsh*t.  But they don’t know for sure it’s bullsh*t.  So, they don’t want to look stupid just in case it isn’t bullsh*t.

Secondly, in most work situations – particularly in the UK – we try hard to be polite and avoid confrontation.

So, when someone says “we need more synergy going forward”, everyone else nods in agreement rather than say “sorry, but what do you actually mean by that?”

Why are we talking about this?  Well, in our industry, one of the most overused and least understood words is ‘omnichannel’.  It is used to describe any number of things.  A trend…”one of the biggest trends in our industry is omnichannel”.  A strategy…”we need to have an omnichannel strategy”.  An activity…”this activity needs to have an omnichannel approach”.  The term gets used and misused a lot.

We think ‘omnichannel’ means thinking about channels.  We think that there are 3 ways you need to think about channels.  If you do these 3 things well, you will have delivered an ‘omnichannel’ approach.  Even if you’re not aware of it.

So, what are the 3 ways that you need to think about channels?

Individually: have individual channel strategies.  This is about how to win in specific channels.  For instance, how you win in eCommerce or Discounters or Convenience.  It is about understanding why shoppers use that channel.  It is about understanding what shoppers currently buy or are most likely to buy in that channel.  It is about what is important to shoppers when shopping in that channel.

This should direct what you sell – e.g. which categories, sub categories, product types, pack sizes).  It should direct how you sell – e.g. where and how products are displayed, what activation you need, which promotions you run. It could mean more ‘On the Go’ formats for the convenience channel.  It could mean differentiated pack sizes in Discounters.  It could mean hero images not pack shots in the eCommerce channel.

Collectively: have a multi channel approach.  This is about how to win across channels.  To do this effectively you need to be clear on the role that different channels play (for your total Business, a category, a brand).  This is something that drinks companies have been doing for a long time.  For instance, in spirits the role of OnTrade has been to drive trial and brand equity.  The role of Off Trade has been to drive volume.  A company like Coca Cola, sells a variety of different pack sizes at very different price per ml in different channels.

This is something that other FMCG manufacturers need to properly think about as more trade moves from large supermarkets to eCommerce, Discounters, Convenience and On the Go channels.  The key is to make sure that what you do in different channels is complementary.  So that those things work together to drive overall sales across channels, not compete for exactly the same sales.

Connecting: link activities between channels.  This is about what you do between channels.  It means creating a more seamless connection of activities between two channels – usually online and offline.  This is becoming increasingly important, as more shoppers see (or research) things online and buy in store or vice versa.

This can be done at a strategic level.  For example, Graze’s online subscription business allows them to test different products, learn what is and isn’t working, then bring the winners to retail at a speed that other companies can’t match.  It can be done at an individual activity level.  For example, Orangina gave away product samples in online shopping orders and included a coupon for money off a purchase – redeemable online or in store.

There you go.  The 3 ways you need to think about channels.

So, now you know this, the next time some bright spark says “we need an omnichannel approach to this”, you can politely say “great, tell me a bit more about what you mean by that”.

Just don’t look too smug when they splutter their way through an answer.

Feel free to forward.  Have a great weekend and speak to you next week.